U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended March 31, 1998
Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
Commission file number 1-8631
Dover Investments Corporation
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 94-1712121
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
100 Spear Street, Suite 520, San Francisco, CA 94105
(Address of Principal Executive Offices)
(415) 777-0414
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of each of the issuer's classes of common
stock, as of March 31, 1998, were as follows:
Class A Common Stock, $.01 par value 745,843 Shares of Common Stock
Class B Common Stock, $.01 par value 316,534 Shares of Common Stock
Transitional Small Business Disclosure Statement
Yes No X
THIS REPORT CONSISTS OF 11 SEQUENTIALLY NUMBERED PAGES.
DOVER INVESTMENTS CORPORATION
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
Consolidated Balance Sheets
as of March 31, 1998 and December 31, 1997................................. 3
Consolidated Statements of Operations
for the Three Months Ended March 31, 1998 and 1997......................... 4
Consolidated Statement of Stockholders'
Equity for the Three Months Ended March 31, 1998........................... 5
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1998 and 1997......................... 6
Notes to Consolidated Financial Statements................................. 7
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operation..........................................8
PART II. OTHER INFORMATION ...............................................10
SIGNATURES ................................................................11
DOVER INVESTMENTS CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, 1998 and December 31, 1997
(in thousands except share amounts)
03-31-98 12-31-97
ASSETS
Cash $ 2,313 $ 2,660
Restricted Cash 1,159 1,416
Homes Held for Sale 1,290 1,290
Property Held for Development 21,189 20,610
Other Assets 2,555 2,781
Deferred Income Taxes 255 352
TOTAL ASSETS $28,761 $29,109
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued Interest and Other Liabilities 794 1,373
Notes Payable 6,752 7,063
Minority Interest in Joint Venture 247 226
TOTAL LIABILITIES 7,793 8,662
STOCKHOLDERS' EQUITY
Class A Common Stock Par Value, $.01 Per
Share -- Authorized 2,000,000 Shares; Issued
805,909 at 3/31/98 and 804,927 at 12/31/97 8 8
Class B Common Stock Par Value, $.01 Per
Share -- Authorized 1,000,000 Shares; Issued
321,094 at 3/31/98 and 322,427 at 12/31/97 3 3
Additional Paid-In Capital 19,827 19,810
Retained Earnings from January 1, 1993 1,467 1,272
Treasury Stock (60,066 at 3/31/98 and
119,316 at 12/31/97 of Class A Shares
and 4,560 of Class B Shares (337) (646)
TOTAL STOCKHOLDERS' EQUITY 20,968 20,447
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $28,761 $29,109
See accompanying notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except share amounts)
Three Months Ended
March 31,
1998 1997
Home Sales $ 3,115 $ 2,448
Cost of Sales (2,589) (2,172)
Gross Profit 526 276
Selling Expenses (107) (170)
General and Administrative Expenses (141) (194)
(248) (364)
Gross Profit (Loss) 278 (88)
Other Income
Interest Income 47 23
Total Other Income 47 23
Income (Loss) before Income Taxes 325 ( 65)
Provision for Income Taxes (130) -
Net Income (Loss) $ 195 $ ( 65)
Net Income (Loss) per Share $ 0.18 $ (0.07)
Net Income per Share Assuming Dilution $ 0.17 $ -
See accompanying notes to Consolidated Financial Statements.
<TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Three Months Ended March 31, 1998
(in thousands)
<CAPTION>
Additional Treasury
Common Stock Paid-In Retained Stock
Class A Class B Capital Earnings at Cost Total
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1998 $ 8 $ 3 $19,810 $ 1,272 $(646) $20,447
Reissuance of Treasury
Stock - - 17 - 309 326
Net Income - - - 195 - 195
Balance at March 31, 1998 $ 8 $ 3 $19,827 $ 1,467 $(337) $20,968
<FN>
See accompanying notes to Consolidated Financial Statements.
</TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months ended March, 31, 1998 and 1997
(in thousands)
Three Months
Ended March 31,
1998 1997
Cash Flows from Operating Activities:
Net Income (Loss) $ 195 $ (65)
Reconciliation of Net Income (Loss) to
Net Cash (Used in) Operating Activities:
Minority Interest 21 17
Deferred Taxes 97 -
Changes in Assets and Liabilities:
Restricted Cash 257 (1)
Property Held for Development (579) 844
Other Assets 226 (16)
Accrued Interest and Other Liabilities, Net (579) (814)
Net Cash (Used in) Operating Activities (362) (35)
Cash Flows from Investing Activities:
Proceeds from Securities Purchased under
Agreement to Resell - 1,400
Net Cash Provided by Investing Activities - 1,400
Cash Flows from Financing Activities:
Repayment of Notes Payable (311) (2,500)
Reissuance of Treasury Stock 326 199
Net Cash Provided by (Used in)
Financing Activities 15 (2,301)
Net Decrease in Cash (347) (936)
Cash at Beginning of Period 2,660 1,438
Cash and End of Period $ 2,313 $ 502
See accompanying notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
Notes to Consolidated Financial Statements
March 31, 1998
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim consolidated
balance sheets as of March 31, 1998, and December 31, 1997, the related
consolidated statements of operations for the three month periods ended
March 31, 1998 and 1997, the consolidated statements of stockholders' equity
for the three months period ended March 31, 1998, and cash flows for the
three month periods ended March 31, 1998 and 1997, reflect all adjustments
(consisting of normal recurring accruals and elimination of significant
intercompany transactions and balances) necessary for a fair presentation of
Dover Investments Corporation ("the Company").
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. Accordingly, these statements
should be read in conjunction with the statements and notes thereto included
in the Company's 1997 Form 10-KSB and the Notes to the Consolidated Financial
Statements, included therein. The results of operations for the quarter
ended March 31, 1998, are not necessarily indicative of the results which may
be expected for the entire year.
The symbols for the Class A Common Stock and the Class B Common Stock are
"DOVR-A" and "DOVR-B", respectively.
2. NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed, on a combined basis, for the two
classes of common stock, Class A and Class B. Computations are based upon
the weighted average number of common shares outstanding. The weighted
average number of Class A and Class B share equivalents used to compute net
income per share was 1,005,994 at March 31, 1998, and 968,346 at
March 31, 1997. Fully diluted earnings per share gives effect to all dilutive
potential common stock.
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND PART I
RESULTS OF OPERATIONS ITEM 2
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company's investment in property held for development
and homes held for sale increased by $579,000 from its carrying value at
December 31, 1997. This increase resulted primarily from capitalized
expenditures for the ongoing development of real property located in San
Leandro, California (the "Marina Vista property"), and the subdivision in
Tracy, California (the "Glenbriar Joint Venture"). At March 31, 1998, the
Company has completed lot improvements on one hundred and ninety eight lots
and partial improvements on fifty one additional lots. Of the one hundred
and ninety eight lots with completed lot improvements, ten are part of a
model complex, one hundred and sixty three have been built, sold and closed,
twenty one are under construction, nineteen of which have contracts of sale
and two are for sale. The remaining four of the one hundred and ninety eight
lots have lot improvements and will be further developed during the next
phase of construction. The market for homes at Marina Vista improved
substantially during 1997 and in the first part of 1998.
The Company continues to be part of a Glenbriar Joint Venture (the "GJV")
with Westco Community Builders, Inc. ("Westco") in Tracy, California which
originally owned one hundred and eight acres of land comprising a portion of
the Glenbriar Estates Project. During 1996, the Company formed a limited
liability company with Westco, known as Glenbriar Venture #2 which holds
options to purchase approximately one hundred and thirty one additional
acres of land also comprising a portion of the Glenbriar Estates Project.
GJV and Glenbriar Venture #2 have succeeded in rezoning the Glenbriar Estates
property to Low Density Residential and have obtained the approval of new
tentative subdivision maps which provide for approximately three hundred and
eighty two lots on the GJV property and approximately five hundred lots on
the Glenbriar Venture #2 property. The tentative subdivision maps provide for
four lot types ranging in size from 6,000 square feet to one acre in size.
In 1997, GJV completed rough grading of the entire GJV property and has
installed the principal off tract and "backbone" improvements. GJV has
obtained final subdivision maps covering ninety two of the 6,000 square
foot lots (units 5 & 6), and eighty two of the 7,200 square foot lots
(units 1 & 2). Units 5 & 6 were sold in an "unfinished" state to an unrelated
merchant builder. This builder has sold houses on all of the lots in units
5 & 6. GJV has also granted this builder an option to purchase an additional
eighty eight lots (unit 7) in an "unfinished" state, and the builder has
notified GJV of its intention to exercise the option. The Company and Westco
have agreed to construct houses for sale on the eighty two 7,200 square foot
lots in unit 1 & 2, site work is almost completed and model homes are under
construction. GJV currently has two other final subdivision maps on file
with the City of Tracy pending approval covering eighty four lots
(units 3 & 4). GJV intends to develop these lots by construction of single
family homes for sale to the public. Additional subdivision maps will
be submitted for approval as the market will permit. In the future, GJV
intends to continue building homes for sale to the public, as well as sell
lots to unrelated merchant builders.
During 1997, the Company entered into agreements with Westco whereby Westco
would construct and sell two higher priced custom single family homes in the
Silicon Valley Region of California. The profits from these two homes will
be split between the partners upon sale. The properties have been purchased
and construction has commenced on both homes.
During the three months ended March 31, 1998, the Company used its liquidity
to fund expenditures in connection with the Marina Vista property, the Tracy
Joint Venture, and its general and administrative expenses. The Company
met its funding requirements primarily from cash reserves and from revenues
from home sales. The Company also obtained additional construction financing
secured by the homes under construction. The Company's primary source
of liquidity in the future will continue to be from revenues generated from
home sales, lot sales, and from construction financing when deemed
appropriate. The Company believes that it has sufficient cash available to
complete the development and construction of the Marina Vista property, as
well as pay off the debt discussed below when it becomes due, and make its
required contributions to the Glenbriar Joint Ventures.
At March 31, 1998, the Company borrowed a total of $6,752,000 to pay for
home construction costs. The loans are secured by lots and homes under
construction and will be paid from the proceeds of home and lot sales. The
loans bear interest at the rate of prime plus 1.5 percent per annum and
mature on September 30 and December 31, 1998. The Company also obtained
an $802,000 loan secured by four model homes. The loan bears interest at
the rate of 11.25 percent per annum and matures on June 30, 1998.
RESULTS OF OPERATIONS
For the quarter ended March 31, 1998, the Company had income of $195,000,
compared to a loss of $65,000 for the same period in 1997. Total sales for
the quarter ended March 31, 1998, were $3,115,000, resulting in a gross
profit of $526,000, compared to $2,448,000 in sales and a gross profit of
$276,000 for the same period in 1997.
The Company expects that the Marina Vista project and the Glenbriar Estates
Project will provide a profit from the sale of homes and lots. The Company
expects to invest in other real estate projects when appropriate
opportunities occur and is not subject to any limitations on the percentage
of assets which may be invested in any single investment or type of
investment. In order to maintain it's market share of new home sales, the
Company keeps home prices competitive with other builders of a similar
product, in the vicinity of the project.
Interest income in the first quarter of 1998 increased to $47,000 compared
to $23,000 in 1997, due to higher cash balances from increased home sales.
For the three months ended March 31, 1998, general and administrative
expenses decreased by $53,000 from those expenses incurred in the same
period in 1997. The decrease in general and administrative expenses for
the first quarter was attributable to lower professional fees and other
administrative expenses. At March 31, 1998, home sales increased by
$667,000, the cost of sales increased by $417,000, compared to the same
period in 1997. The increase resulted from the sale and construction of
a larger number of homes.
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 5, 1998, the Company held its annual meeting of stockholders
for the purpose of electing directors and ratifying the appointment
of the Company's auditors. All of the Company's nominees were
elected directors as follows: Arnold Addison, 523,684 votes for
and 28,952 votes withheld; John Gilbert 2,657,094 votes for
and 1,230 votes withheld; Lawrence Weissberg, 2,657,214 votes
for and 1,110 withheld; and Will C. Wood, 2,657,094 votes for
and 1,230 votes withheld. The proposal to ratify the appointment
of Grant Thornton LLP as the Company's independent public
accountant for the year ended December 31, 1997 and 1998, was
approved with 3,181,607 votes for, 211 votes against and 29,142
votes abstaining.
Item 5. OTHER INFORMATION
The Company's Class A Common Stock and Class B Common Stock are
traded on the National Quotation Bureau pink sheets and on the
NASD OTC Bulletin Board under the symbols DOVR-A and DOVR-B.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
The exhibit listed below is filed with this report.
27.1 Financial Data Schedule for the Quarter Ended March 31, 1998.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K (continued)
B. Reports on Form 8-K
A report on Form 8-K, dated April 28, 1995, reported a tax
settlement with the IRS for tax years 1985 - 1990.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned, hereunto duly authorized.
DOVER INVESTMENTS CORPORATION
Date: May 8, 1998 By: /s/Lawrence Weissberg
Lawrence Weissberg
Chairman of the Board, President
and Chief Executive Officer
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<S> <C> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,472
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 22,479
<CURRENT-ASSETS> 25,951
<PP&E> 2,810
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,761
<CURRENT-LIABILITIES> 1,041
<BONDS> 6,752
0
0
<COMMON> 11
<OTHER-SE> 20,957
<TOTAL-LIABILITY-AND-EQUITY> 28,761
<SALES> 419
<TOTAL-REVENUES> 3,162
<CGS> 2,696
<TOTAL-COSTS> 2,696
<OTHER-EXPENSES> 141
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 325
<INCOME-TAX> 130
<INCOME-CONTINUING> 195
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 195
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.17
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